Moody’s exits South Africa licence in strategic pivot to cross-border growth

Moody’s has surrendered the regulatory licence of its South African ratings arm, marking a shift in strategy as the global agency refocuses on cross-border investors and African issuers seeking international capital.

The decision, confirmed by South Africa’s market conduct regulator, means the local unit will no longer issue credit ratings or operate as a recognised provider for banks’ regulatory calculations. However, authorities have moved to steady the transition, allowing banks to continue using existing Moody’s South Africa ratings for up to 24 months.

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In a notice dated April 16, the Financial Sector Conduct Authority said: “Moody’s Ratings SA informed the Authority that it no longer wants to be registered as a credit rating agency in terms of the Act and that it is renouncing its registration.”

The regulator added that the Prudential Authority, which oversees banks, had requested more time to avoid disruption. “The Authority has considered the request and decided to extend the period to 24 months,” it said.

A separate notice indicated that the Prudential Authority intends to withdraw recognition of Moody’s South Africa as an eligible external credit assessment institution, a designation that allows lenders to use ratings to determine capital buffers and reserve requirements.

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Moody’s said the move forms part of a broader adjustment to its business model rather than a retreat from the country. A spokesperson told Reuters the agency would continue to support clients through its Johannesburg office while issuing ratings from other locations, in line with its approach in parts of Asia and Latin America.

The spokesperson added that Africa remains central to the firm’s long term plans, pointing to growing demand for funding across the continent and its investment in regional partnerships.

The deregistration does not affect South Africa’s sovereign credit rating, which continues to be assigned by Moody’s global entity. Nor does it invalidate ratings on local issuers produced by analysts outside the country.

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Moody’s has been active in South Africa since 1994 and established a local presence in 2003, playing a key role in the development of domestic debt markets. Its local unit was formally registered in 2014, enabling banks to use its ratings for regulatory purposes.

With that status set to lapse, lenders will gradually shift towards other recognised agencies. For now, regulators expect the extended transition period to limit market disruption and give banks and issuers time to adjust without sudden changes to capital requirements or funding costs.

The move comes as global ratings agencies continue to reassess South Africa’s credit profile. Moody’s currently rates the country at Ba2 with a stable outlook, while other agencies maintain sub investment grade positions, citing fiscal strain alongside gradual economic reforms.